Jouni Keronen’s
speech at Contribution of Business for a Carbon Neutral Europe event at COP25,
13 December 2019, Madrid

We
need to have more systemic solutions for climate mitigation

Ladies and Gentlemen,

climate
change is accelerating and GHG emissions continue to increase.

The
available carbon budget for the 1.5°C target will be exhausted in less than ten
years.

In order to
limit global warming to 1.5°C above pre-industrial levels, the level of
ambition and the action taken will need to grow five-fold.

We need to
have a step change in clean investments.

A large
majority – more than 90% of the investments – need to come from the private
sector. Governments can ban fossils but there is not enough public money on the
table for the investments.

Investments
from the private sector will not be forthcoming unless the new business is
profitable and involves fewer risks than the one it replaces.

The most
effective way to impact profitability is by carbon price. When polluting
businesses need to pay more, less polluting businesses will become more
profitable.

There has
been much talk about carbon price but using it is nowhere near where it should
be:

only about 20% of global GHG
emissions have any kind of price and

only in a fraction of carbon pricing
initiatives, the prices are effective

the use of carbon pricing has grown only
at about 1%/year over the past 6 years

in 2018, carbon pricing revenues
were USD 44 billion, the pre-tax fossil subsidies were close to USD 300 billion
and the post-tax subsidies for damage and health issues were around USD 5
trillion

The system
works still “upside down” and fails to create adequate carrots for clean
investments.

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Risks can
be eliminated via long term climate policies that do not change after every
election. This is important, since in the EU alone, for example, there will be close
to 200 parliament elections by 2050.

And due to
the shrinking carbon budget, we need to take it also to our baseline and set our
targets and tracking based on it. We need to start to manage carbon like money.

Until now,
our long-term climate policies have been too vague, too unpredictable and the
use of carbon price far too modest to trigger a sufficient level of investment.

sets a clear climate target,
including a carbon budget, to achieve climate neutrality by 2050

plans and agrees a more systemic
solution via extending the ETS and factors in verifiable carbon sinks

creates a green fund to support the
transformation of society and a just transition

introduces several measures to improve
and enhance a level playing field for competition

We warmly
welcome the EU’s long-term goal for 2050 agreed last night and the proposal for
the European Green Deal. They are major steps forward and would create a basis
for a systemic solution.

We are also
pleased to notice that the EU will do its best to engage other countries
parties into more ambitious climate policies. EU is in a excellent position to
develop systemic solutions used as such or partially also elsewhere and we propose
the development and escalation of systemic solutions for the key theme for next
year and COP26 in Glasgow.